Receiver: Not really sure what I need, I spoke to my friend and he said that not all receivers can seperate audio when using an HDMI connection? I was thinking the Yamaha 6190 but not sure if it is going to be overkill.

If you're looking at 46" and 50" TV's, I'd consider going bigger. Is the basement going to be entirely home theater? If so, your viewing distance is at least 10 ft? I've got a 65" Olevia LCOS 1080p TV & it looks fantastic at 10 ft. Before that I had a 53" Pioneer CRT RPTV. It also looked great at 10'. When it comes to screen size, there's no such thing as too big. If you already have a bookshelf that only accomodates a 47" TV, sell it and buy a bigger bookshelf.

How do you plan to route your cabling between AV sources and the AVR and TV? Are you going to switch sources from the TV or the AVR? I've got everything going to the receiver and then to the TV and speakers. Not sure what you mean by separating the audio from HDMI. Just make sure the receiver has enough inputs to handle all the AV sources & enough power for your speakers.

"not all receivers can seperate audio when using an HDMI connection"
This is very true a lot of the entry level recievers with HDMI(mine included) work are what they call HDMI™ Pass-Through in which the receiver would not pass audio throught to the speakers only video to your display.